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Exam 6: Supply, Demand, and Government Policies

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Question 131

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If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

A) True
B) False

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Question 132

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You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

A) This type of tax is an example of a payback tax.
B) Your employer is required by law to pay $400 to match the $400 deducted from your check.
C) The $400 that you paid is the true burden of the tax that falls on you, the employee.
D) All of the above are correct.

E) A) and B)
F) A) and C)

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Question 133

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Figure 6-24 -Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Table 6-4 The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. -Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

The United States is the only country in the world with minimum-wage laws.

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Figure 6-35 -Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

A binding minimum wage creates a shortage of labor.

Taxes levied on sellers and taxes levied on buyers are equivalent.

A binding minimum wage creates unemployment.

Figure 6-21 -Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

Figure 6-24 -Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph) . Relative to the tax on buyers, the tax on sellers would result in

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) binding price ceiling. (ii) non-binding price ceiling. (iii) binding price floor. (iv) non-binding price floor.

Table 6-4 The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. -Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?

The price received by sellers in a market will increase if the government decreases a

If a tax is levied on the buyers of a product, then the supply curve will